APL Apollo Tubes Ltd. share price target

Valuation: At a CMP of Rs. 1,912.1, the company's share is trading at TTM P/E multiple of 31.5x. Moreover, it is trading at a P/BVPS and EV/EBITDA multiple of 6.3x and 16.2x, respectively. Anticipating higher acceptance of the DFT products and the volume growth guided by the management, we have increased the EV/EBITDA valuation multiple from 7.8x to 8.5x. Applying the same to FY20E EBITDA, we arrive at a target price of Rs. 1,850.4 per share. Thus...

Largest manufacturer of ERW Pipes, revenue growth aided by strong Volumes and capacity expansion. Total Industry size in value /volume terms for ERW Pipes is Rs. 32,500 Cr./ 8MTPA resp. APL Apollo Tubes to have a total installed capacity 2.0MTPA by FY18 end. Indian ERW market growing @ 9-10% p.a.

APL Apollo Tubes is amongst India's leading branded steel products manufacturers. The Company operates seven manufacturing facilities with a total capacity of 1.3 Million MTPA. It has pan India presence with units strategically located in Sikandarabad (3 units), Bangalore, Hosur, Murbad and Raipur. APL Apollo's multi-product offerings include over 400 varieties of MS Black pipes, Galvanized Tubes, Pre-Galvanized Tubes, etc.

We initiate with buy for a price target of Rs 2647.6 (12xFY20 EV/EBIDTA ) representing an upside potential of 73.6% from the CMP of Rs 1525 over the next 27 months.

We recently met the management of APL Apollo Tubes (APL) to understand its business model and long term prospects. APL is one of the leading ERW steel tubes manufacturers in India. The product range of the company comprises four major types of pipes/tubes, viz. hollow section pipes, round pipes (black), pre-galvanised tubes (GP) and galvanised tubes (GI). In terms of product-wise revenue break-up, for 9MFY17, hollow section pipes contributed 46.1% to the topline while pregalvanised (GP), round pipes (black), galvanised tubes (GI) and others (trading & scrap) contributed 22.6%, 14.7%,14.1% and 2.5% of the...

APL Apollo Tubes Ltd. (APL) is one of the leading manufacturers of ERW pipes in India with a manufacturing capacity of 1.3mn tonnes. Its nearest competitor is nearly half the size of it. Out of the 1.3mn tonnes, galvanized (GI) and pregalvanized (GP) pipe capacity is 0.12mn tonnes and 0.2mn tonnes, respectively. ERW pipes and structures find application across various industries such as a...

APL Apollo is the fastest growing steel tube manufacturer in India, and has attained pole position in this category. The company is headquartered in Delhi NCR, and has six...

Top-line increased due to higher realization amid lower sales volume: On the back of around 44.9% Y-o-Y rise in the realization of core branded products, APL reported a 11.5% Y-o-Y increase in the top-line to Rs. 13,158.7mn. Demonetization (DeMo) led to lower sales volume of core products, which declined by 10.8% Y-o-Y to 0.23mn tonnes in Q4 FY17. Black and GI pipes sales was severely impacted and declined by 43.5% and 12.9% Y-o-Y, respectively. On an annual basis, top-line increased by 7.9% (lowest in last five years) to Rs. 45,450mn. Sales volume of core products and realization increased by 4.2%...